CARH’S BROADCAST E-MAIL – Regulatory Update

On Friday, the Rural Housing Service (RHS) published an Unnumbered Letter (UL), dated December 4, 2019, entitled, Reserve Accounts for Rural Development’s Multi-Family Housing Properties (Supervised Bank Accounts). This UL supersedes and clarifies a previous UL issued on September 28, 2018.

The September 28, 2018, UL eliminated the dual signature requirement for reserve accounts. As you will recall, CARH and members of the Management Committee had raised concerns with RD that banks generally no longer accommodated having dual signature accounts. RD modernized its practices and established new guidelines for Reserve Accounts. As a result, RD employees no longer had to present their federal government ID to the bank or personal information to the bank. Borrowers no longer were required to obtain collateral pledges, as such. Funds that exceeded the federally insured limit under a Tax ID Number were required to be moved to a different qualified banking institution that insured the funds unless the current financial institution provided additional surety such as a collateral pledge that was already be in place.

The December 4, 2019, UL continues the terms listed in the previous UL and also provides an updated Deposit Account Control Agreement (DACA) that better defines and clarifies the rights, authorizations, and protections of multi-family housing properties and the financial institution.

If you have any questions or comments on the UL, please contact the CARH national office at carh@carh.org or 703-837-9001.